FRC Interim Guidance on Safeguarding Auditors During FCA Transition

FRC News

Published March 17th, 2026

Detected March 17th, 2026

Summary

The Financial Reporting Council (FRC) has published interim guidance for safeguarding auditors supporting payment and e-money institutions transitioning to the FCA's new Supplementary Regime on May 7, 2026. This non-mandatory guidance aims to ensure consistent and high-quality assurance engagements during the transition period.

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What changed

The Financial Reporting Council (FRC) has issued new interim guidance for safeguarding auditors concerning payment and e-money institutions preparing for the Financial Conduct Authority's (FCA) new Supplementary Regime, effective May 7, 2026. This guidance provides principles to support auditors in ensuring compliance with the FCA's enhanced recordkeeping, reconciliation, and governance requirements, which aim to strengthen consumer protection. The FRC emphasizes that this guidance is non-mandatory, transitional, and does not create new legal obligations, serving instead as a support tool until a formal safeguarding assurance standard is developed following public consultation in 2027.

Regulated entities, specifically payment and e-money institutions, and their safeguarding auditors must be aware of the FCA's new regime and the FRC's interim guidance. Auditors should use this guidance to exercise professional judgment and plan their assurance engagements, particularly as legacy and new requirements may operate in parallel. While the guidance is non-binding, adherence is encouraged to ensure quality and consistency in assurance during this transition. The primary focus is on preparing for the new regime and ensuring robust safeguarding practices are maintained.

What to do next

Review the FRC's Interim Guidance on Payment and E-Money Safeguarding Assurance Engagements.
Ensure auditors are familiar with the FCA's new Supplementary Regime requirements effective May 7, 2026.
Incorporate principles from the interim guidance into planning and execution of safeguarding assurance engagements.

Source document (simplified)

FRC publishes interim guidance to support safeguarding auditors during transition to the FCA’s new supplementary regime

News types: Guidance

Published: 17 March 2026

The Financial Reporting Council (FRC) has today published new Interim Guidance on Payment and E-Money Safeguarding Assurance Engagements, providing support for safeguarding auditors as payment and e-money institutions prepare to transition to the Financial Conduct Authority’s (FCA’s) new Supplementary Regime, which comes into force on 7 May 2026.

The FCA’s new regime introduces enhanced requirements for recordkeeping, reconciliations and governance to address weaknesses in existing safeguarding arrangements and strengthen consumer protection. Safeguarding auditors will play a key role in assuring firms’ compliance with these expectations during the first audit cycle under the new regime.

The Interim Guidance provides principles to support high quality, consistent safeguarding assurance engagements from implementation of the new rules until the FRC issues a dedicated safeguarding assurance standard following public consultation, expected in 2027. It is intended to help auditors exercise professional judgement, plan their work and determine appropriate procedures in a period where legacy rules and new requirements operate in parallel.

The FRC emphasises that the Guidance is nonmandatory and is not a performance standard. It does not create new requirements, nor does it replace or override the Electronic Money Regulations (EMRs), Payment Services Regulations (PSRs) or CASS 15. A formal assurance standard will be introduced only after consultation and will be issued as an appendix to the existing CASS Assurance Standard.

To support familiarity for auditors, the Interim Guidance draws on the structure and principles of the CASS Assurance Standard and signposts relevant paragraphs. These references are illustrative and intended to aid understanding, rather than forming an exhaustive or prescriptive list. The Guidance does not require safeguarding auditors to conduct CASS style audits under the Supplementary Regime, nor does it mandate application of the CASS Assurance Standard in full.

Overall, the Interim Guidance is a transitional resource developed to help safeguarding auditors prepare for the introduction of the FCA’s Supplementary Regime while maintaining quality, consistency and appropriate professional judgement. It remains in effect only until the dedicated safeguarding assurance standard is finalised and comes into force.

Read the Interim Guidance.